Organizational Capital Efficiency and Labour Productivity: Evidence from Publicly Listed Firms in East Africa
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Keywords
Organizational capital efficiency, labour productivity, intangible assets, organizational routines, MVAIC, organizational citizenship behaviour, East Africa, listed firms
Abstract
Organizational capital, the business processes, managerial routines, workplace organization, and external relational structures through which firms coordinate production, is theorized as a core driver of firm productivity, yet its payoff in developing economies remains contested. The study establishes the effect of organizational capital efficiency on labour productivity among publicly listed firms in Kenya, Uganda, Tanzania, and Rwanda. Using an 11-year panel (2013–2023) of audited financial statements yielding 318 firm-year observations from 29 continuously listed firms, organizational capital efficiency was measured within the Modified Value-Added Intellectual Coefficient Model (MVAIC™), modified to isolate organizational capital from structural capital by treating it as the residual share of value added after direct human, innovation, and brand inputs are netted out, with organizational capital captured through investments in business processes, workplace organization, and external relations. Labour productivity was measured as labour-specific total factor productivity recovered residually from a value-added Cobb–Douglas production function rather than as a simple output-per-worker ratio. Fixed-effects estimation, validated by a Hausman test, shows that organizational capital efficiency has a positive but statistically insignificant effect on labour productivity (β = 0.022, p = .096). The findings suggest that organizational systems in East African firms evolve slowly, are unevenly implemented, and require sustained managerial commitment and complementary capabilities before measurable productivity gains materialize. The study concludes that the productivity-enhancing potential of organizational capital remains underexploited in the region and draws implications for managers seeking to formalize structures and for policymakers designing enterprise-upgrading and disclosure policies.
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James Mwenda Mugambi , Department of Economics, School of Business and Economics, Moi University, P.O. Box 3900-30100, Eldoret, Kenya
Department of Economics, School of Business and Economics, Moi University, P.O. Box 3900-30100, Eldoret, Kenya
James Onyango, Department of Management Science, School of Business and Economics, Open University of Kenya
Department of Management Science, School of Business and Economics, Open University of Kenya
Yabesh O. Kongo , Department of Economics, School of Business and Economics, Kisii University
Department of Economics, School of Business and Economics, Kisii University